|[January 16, 2013]
New Report from AIR Worldwide Puts Recent Catastrophe Losses in Perspective
BOSTON --(Business Wire)--
In 2011, insured losses from global natural catastrophes exceeded USD
110 billion according to industry sources, the second-highest figure
ever recorded. A new report from catastrophe modeling firm AIR Worldwide
reveals that there is nearly a 7 percent probability that the global
insurance industry will experience this loss level or greater in any
given year (translating to a 15-year return period loss).
AIR's report titled Taking a Comprehensive View of Catastrophe Risk
Worldwide not only puts the 2011 losses in perspective but also
examines scenarios that could result in much larger worldwide insurance
losses. For example, AIR estimates that the 1 percent exceedance
probability loss (or the 100-year return period loss) is just over USD
200 billion - a figure that could be driven by an active and severe U.S.
hurricane season or by a combination of different perils in different
regions, as was the case in 2011. AIR estimates the average annual loss
(AAL) from natural catastrophes is USD 59 billion, in line with global
catastrophes losses from 2012, which are estimated to be around USD 58
billion. Those estimates are based on perils and regions currently
modeled by AIR.
"Many in the industry were surprised at the aggregation of losses in
2011, especially since we didn't have a major U.S. hurricane," said Bill
Churney, senior vice president, AIR Worldwide. "However, AIR's models
incorporate years with losses much greater than what we experienced in
2011. This is the real value of having a credible catastrophe model - to
fully anticipate possible outcomes, including future catastrophes and
future years that will produce losses exceeding any historical amounts."
The natural catastrophes of 2011, including the Tohoku earthquake in
Japan, flooding in Thailand, earthquakes in New Zealnd, and a
record-breaking severe thunderstorm season in the United States,
resulted in USD 110 billion in insured losses as reported by Swiss Re -
making it the second-highest figure ever recorded from global natural
"Despite the significance of the toll in 2011, insured losses fell well
within the range for which global insurers and reinsurers should be
prepared," continued Churney. "It's our hope that the report will help
companies increasingly concerned about escalating levels of loss to
better understand and own their risk."
The events of 2011 prompted the industry to consider some basic
questions, which AIR's new report explores, such as: How frequent are
loss years like 2011 And are natural catastrophe events becoming more
frequent and/or more severe
AIR is in a unique position to provide guidance with respect to those
questions. AIR develops and maintains detailed databases of insured
properties for each modeled country. The databases serve as the
foundation for all modeled industry loss estimates. Second, AIR takes a
unique approach to generating the catalogs of simulated events in its
software that makes it easy for the user to determine the probability of
various levels of loss for individual events, such as the Tohoku
earthquake, or for whole years of catastrophe activity. Finally, AIR
models the risk from natural catastrophes in more than 90 countries,
which gives it a global perspective. For example, AIR models covered
perils and regions accounting for more than 80 percent of insured losses
from natural catastrophes worldwide in 2011.
"AIR's approach of simulating potential years of activity has long
enabled companies to look at their global risk on an aggregate basis,"
concluded Churney. "We thought the industry would benefit by sharing
such pertinent loss information."
A full version of this report can be found on AIR Worldwide's website at:
About AIR Worldwide
AIR Worldwide (AIR) is the scientific leader and most respected provider
of risk modeling software and consulting services. AIR founded the
catastrophe modeling industry in 1987 and today models the risk from
natural catastrophes and terrorism in more than 90 countries. More than
400 insurance, reinsurance, financial, corporate, and government clients
rely on AIR software and services for catastrophe risk management,
insurance-linked securities, detailed site-specific wind and seismic
engineering analyses, and agricultural risk management. AIR is a member
of the Verisk Insurance Solutions group at Verisk Analytics
(Nasdaq:VRSK) and is headquartered in Boston with additional offices in
North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.
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